El Al is on its way to huge layoffs but demands compensation of $ 100 million from the state

The crisis at El Al. Kenny Rosenberg, the controlling owner of the airline, is demanding $ 100 million in compensation from the state. In addition, it rejects the Treasury's claim that it did not meet the previous aid conditions and did not alienate the company with $ 43 million as part of the issuance of EL AL shares for $ 105 million, which did not materialize due to the fourth wave of the corona.
El Al, which in its financial reports carries a living business note due to its debts, applied to the state following the fourth wave for additional assistance in the amount of $ 150 to 200 million, after its forecasts for the rehabilitation of the airport did not materialize.
The Ministry of Finance, on the other hand, in the additional aid scheme it recently announced, announced that it is willing to lend the company a convertible bond of $ 50 million for three years, provided that the controlling shareholders, Kenny Rosenberg, disburse $ 43 million - an amount previously committed, plus The Ministry of Finance also required the owners of El Al to adjust the size of the company to the current scope of its activities and to sell part of its customer club and its fleet of aircraft.
In a letter sent to Finance Ministry Director General Ram Blnikov, Rosenberg responded to the finance ministry's allegations against him. "Then and even today I stand behind all my commitments. El Al acted decisively and enlisted the help of local and foreign underwriters to execute the offering. However, external factors related to the market situation have thwarted the possibility of its realization. "
The letter further states that "it is clear that the government needs to compensate the aviation industry in general and EL AL in particular for the damages caused to it due to the restrictions on air traffic unique to Israel. I expect compensation from the state of $ 100 million. I am of course open to any negotiations with the Ministry of Finance As for my share of support, beyond the compensation that the state has to give, bearing in mind that I only hold 39% of the shares. "
El Al CEO Avigal Sorek also sent a letter to the Finance Director stating: "El Al demands immediate compensation, time is not working in our favor. "El Al's cash flow situation is complex in light of government decisions." Along with the compensation, the CEO also demands that a green label for safe aviation be formulated as soon as possible, which will allow the company to compete with foreign companies, open the skies to tourists and renew the entry permit for vaccinated tourists.

El Al is on its way to another round of huge layoffs. This week  the company's management held a meeting with representatives of the workers' committees and representatives of the Histadrut, during which the management presented its opening requirements for the company's recovery, which include significant cuts.
According to the main outlines presented to EL AL employees, the Sun Dor airline (whose activity is in any case limited and it flies on Saturdays, among other places) is not expected to continue operating, as part of a move that will take effect next year.
In addition, the Company's management presented an outline designed to meet the requirements presented by the Ministry of Finance to EL AL's management.
First, according to the data presented to the employees, the company is preparing to lay off about 1,500 employees, most of them permanent employees. These employees come from all walks of life, from maintenance personnel to flight attendants, and after the move, El Al is expected to remain with 2,800 employees.
However, according to sources close to the company, El Al is not expected to be left with 2,800 employees in the future, but to outsource to complete the number of employees missing for its operations.
In addition, the Company's management presented an outline designed to meet the requirements presented by the Ministry of Finance to EL AL's management.
First, according to the data presented to the employees, the company is preparing to lay off about 1,500 employees, most of them permanent employees. These employees come from all walks of life, from maintenance personnel to flight attendants, and after the move, El Al is expected to remain with 2,800 employees.
However, according to sources close to the company, El Al is not expected to be left with 2,800 employees in the future, but to outsource to complete the number of employees missing for its operations.
The outline given to the representatives of EL AL employees does not address one important point: the amount that the Rosenberg family is required to transfer to the airline.
El Al recently reported that the Ministry of Finance is demanding a series of additional streamlining measures in exchange for a $ 50 million injection by the state into the airline. The Finance Ministry's announcement to El Al of course also had reservations that were intended to cut the company's operating costs and get rid of unwanted fats: El Al vowed to sell a significant portion of its frequent flyer club activity which is an asset to the company, get rid of leased and owned aircraft and a critical clause: The assistance of the State of Israel ($ 50 million) and also to meet the obligation to inject $ 43 million into an inferior shareholder loan.
Sources close to the company express concern about a situation in which the company's management is trying to put pressure on the Ministry of Finance to reduce the demand for the volume of capital inflows from EL AL's owners through threats of layoffs.
"It does not make sense to continue operating EL AL. The owner is well aware that with a very small number of employees and a very small number of aircraft it is difficult to own an airline. This is not a low cost and not a rebranding situation. El Al, a company that needs its employees for the day when the Corona catastrophe will end, so such a large-scale dismissal does not necessarily make sense, so we will have to live and see what happens and whether these demands will actually be implemented, The financial demands of the Treasury towards him. " El Al stated: "We do not manage the employment relationship through the media."